Climate finance wilkinson (cpi)replicating&scaling up cf-ccxg gf-march2014


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CPI Presentation made during OECD/IEA CCXG Global Forum March 2014: Replicating and scaling-up Climate Change - Lessons from the San Giorgio Group

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Climate finance wilkinson (cpi)replicating&scaling up cf-ccxg gf-march2014

  1. 1. BRAZIL CHINA EUROPE INDIA INDONESIA UNITED STATES +39 041 2700 426 Island of San Giorgio Maggiore 8 30126 Venice Italy Replicating and Scaling-up Climate Finance Lessons from the San Giorgio Group OECD, Paris 18-19 March 2014 Jane Wilkinson Director
  2. 2. An Overview of CPI Work 2 San Giorgio Group 2 • Core framing inquires – What is the role and reasons for public finance? – What are the best delivery mechanisms for public monies? – How can international and national public investment flows be aligned with each other and with private investments? – How do we ensure learning? The San Giorgio Group assembles financial intermediaries and institutions actively engaged in green, low-emission climate resilient finance
  3. 3. An Overview of CPI Work 3 Case studies: analytical framework • Complex interactions between all stakeholders • Investment, returns and profitability • Risk allocation arrangements
  4. 4. An Overview of CPI Work 4 SGG case studies overview EIB multipl e E E PPCR Nepa l Adaptatio n KFCP Indonesi a Forest ry Non- renewables World Bank Risk Instruments First-loss Protection Mechanisms Risk Mitigation Instruments Policy Risk Instrumen ts Instrument s Renewables time marketdeployment RD&D Deployment & Diffusion Commercial maturity Montalto di Castro ItalySolar PV Walney UKOffshore wind Jädraås SwedenOnshore wind Prosol TunisiaSWH Ouarzazate MoroccoCSP CIFs+ multipleCSP
  5. 5. An Overview of CPI Work 5 Prosol Tunisia Small-Scale Renewables Goal • To accelerate the penetration of Solar Water Heaters in the residential sector by engaging local commercial banks Challenges • High up-front cost  Lack of consumer financing • Distorting subsidies  Perverse policy incentives • Knowledge gaps  Risk aversion Measures USD million 60 0.224.0 Investment Subsidy Capacity and Awareness- building Credit Mechanism
  6. 6. An Overview of CPI Work 6 Ouarzazate I CSP Morocco Goal • To develop a large scale Concentrated Solar Power plant that can pave the way for a portfolio of CSP in Morocco and the region Challenges • Early development stage tech  Viability gap • High capital cost  Lack of commercial finance • Multiple partners  Cooperation & coordination Financing GoM– MASEN - Grant $ 126 - Equity $ 40 - Subsidy $280 CTF (WB/AfDB) - Loan $197 IFIs (AfDB,ADB,EIB,KF W/BMZ/BMU,EC) - Loans $639 - Grants $56 Private Developer - Equity $120 % of Project cost: 30% 13.5% 47.5% 9%
  7. 7. An Overview of CPI Work 7 Indonesia KFCP Peat Forest Rehabilitation Goal • To demonstrate a credible, equitable and effective approach to rehabilitating peat forests that could inform efforts in other locations and geographies. Challenges • Technical and scientific feasibility questionable, little know-how  Test technical approaches and scientific methods • Potential conflict with local communities  Construction, operation phase, permanence • Policy and legislative uncertainty  Overcome poor zoning, contested land tenure, unclear approval processes
  8. 8. An Overview of CPI Work 8 Nepal - PPCR Engaging the Private Sector in Climate Resilience Goals • To tackle farmers’ barriers to climate resilience by engaging private agribusinesses to train farmers on climate resilient agricultural practices • To build models for making climate resilience a long-term business Challenges • Awareness and know-how Develop tailored capacity building measures, leveraging companies’ networks and incentives to train farmers in their supply chains • Access to climate-adaptive agricultural inputs and equipment  Facilitate market entry to equipment provider • Lack of access to finance Buy down banks’ risks with innovative risk-sharing mechanisms
  9. 9. An Overview of CPI Work 9 How to scale up green finance? • Develop well-articulated domestic enabling environments to encourage further private investment. • Continue to invest in, and ensure effective use of, international public finance, which play a critical role in facilitating low-carbon and climate-resilient investments (consider specific context!) • Provide new and improved mechanisms to address risks, e.g. policy risk insurance and first loss mechanisms Viability Know- ledge Reduced Risk Enabling Environment Public finance Risk mitgation
  10. 10. BRAZIL CHINA EUROPE INDIA INDONESIA UNITED STATES +39 041 2700 426 Island of San Giorgio Maggiore 8 30126 Venice Italy …helping nations spend their money wisely